The Federal Court was recently faced with an application for leave for a company to be wound up voluntarily in circumstances where liquidators had been appointed to the company despite a winding up application already having been filed.

In Shaw, in the matter of B & V Lynch Pty Ltd v B & V Lynch Pty Ltd [2015] FCA 908, a company had resolve by special resolution to appoint liquidators on the basis that the company was insolvent.  That would have been all well and good had it not been for the fact that, unbeknownst to the company and the liquidators, the Deputy Commissioner of Taxation had already commenced proceedings seeking an order that the company be wound up in insolvency by the Court.  It was not until 10 days after their appointment that the liquidators became aware of the commencement of the winding up proceedings.

Section 490 of the Corporations Act 2001 (Cth) provides that a company cannot (except with the leave of the court) resolve that it be wound up voluntarily if an application to wind up the company has been filed.  By the time that the liquidators became aware of the application having been filed, they had conducted work in connection with the liquidation including terminating the employment of the company’s employees, holding a meeting of creditors at which the voluntary liquidators were not replaced, notifying creditors of their appointment and so on.

Some further time later, the liquidators became aware of the issue faced by them by reason of the operation of s490 of the Corporations Act and accordingly applied to the Court for leave to be granted retrospectively for the appointment of a voluntary liquidator notwithstanding the existence of winding up proceedings.   In making the orders sought, the Court noted that the Deputy Commissioner had not taken any opposition to the appointment, that the liquidators had undertaken significant work on the matter and that there was no recovery action which would be impacted upon by the difference in relation-back date.

B & V Lynch Pty Limited reinforces that the Court is willing in certain circumstances to make retrospective orders giving effect to the appointment of a voluntary liquidator where that appointment has not been made strictly in accordance with the provisions of the Corporations Act.